A Regulatory Vendetta Exposed

The wheels of justice turn slowly, but the Obama Administration’s vendetta against payday lenders is now emerging into full view in federal court. It isn’t pretty. Government regulators so loathed payday lending that they tried to ruin a legal industry by cutting it off from the banking system. This tactic could be used to destroy any business—from gun stores to abortion providers.

Payday lenders, including Advance America and Check Into Cash, sued regulators starting in 2014 after banks began suddenly closing their accounts or refusing them service. Without access to broad banking networks, Advance America says it was forced to spend $3 million last year on armored cars. Check Into Cash has closed 250 storefronts.

Government emails that we’ve examined from the court record show how blatantly they were targeted. “I literally can not stand pay day lending,” read a 2012 email from Thomas Dujenski, then a regional director in Atlanta for the Federal Deposit Insurance Corp. (FDIC). “They are abusive, fundamentally wrong, hurt people, and do not deserve to be in any way associated with banking.” A week later, Mr. Dujenski wrote colleagues: “Any banks even remotely involved in payday should be promptly brought to my attention.”

The lawsuit alleges that regulators pressured banks to cut ties with payday lenders. In 2013, the plaintiffs say, Mr. Dujenski met the chairman of one bank—it isn’t named in court documents—that had a relationship with Check Into Cash. In a deposition this May, the bank’s chairman recalled that Mr. Dujenski described payday lending as a “dirty business.” The regulator then allegedly asked whether the chairman was aware that bank directors could be subject to criminal prosecution.